Spotify Earnings: Listener Growth, Higher Prices, and Efficiency Paving Profitability Path

Spotify reported another solid quarter, demonstrating its progress toward strengthening its platform’s network effect. Spotify’s listener churn rate did not increase upon the implementation of higher prices in many markets. At the same time, its number of subscribers and overall listeners increased substantially, which also accelerated year-over-year advertising revenue growth from the previous quarter. On the bottom line, we are pleased with profitability in the quarter, which the firm believes will continue going forward, in line with our initial assumption. We think increasing demand of the higher-margin audiobooks over time likely will further expand the premium segment’s gross margin.